THE INVESTOR

메뉴열기
March 29, 2024

Trading of Samsung BioLogics shares halted

PUBLISHED : November 14, 2018 - 17:40

UPDATED : November 15, 2018 - 10:15

  • 본문폰트 작게
  • 본문폰트 크게
  • 페이스북
  • sms

[THE INVESTOR] The trading of Samsung BioLogics shares was halted as Korea’s Financial Services Commission concluded on Nov. 14 that the contract drug manufacturer intentionally breached accounting rules in 2015.  The case will be referred to prosecutors.

The FSC said the Samsung unit falsely recognized massive gains in its 2015 books by estimating the value of its controlling stake in Samsung Bioepis, a joint venture with Biogen, with a new accounting method.

 


Related:

Samsung BioLogics reacts to SFC’s ruling on accounting irregularities



“We decided that the company deliberately flouted accounting standards by arbitrary interpreting and implementing rules in order to secure legitimacy of its change of control power in 2015,” said Kim Yong-beom, vice chairman of the Financial Services Commission.

The regulator said that it was illegal to include its affiliate Samsung Bioepis on a consolidated basis in the company’s accounting books between 2012 and 2014. The total value of the fraud is estimated at some 4.5 trillion won (US$3.96 billion).

Samsung BioLogics posted a net profit of 1.9 trillion won in 2015, the first and only black ink until now since its foundation in 2011, by changing the way it estimated how much its stake in Samsung Bioepis was worth.

The firm claimed that it implemented the new method as it lost control over Samsung Bioepis with a high possibility of Biogen exercising the call option to increase its stake to nearly 50 percent due to development results of biosimilars became more visible and substantial but the regulator said it didn’t find any legitimate reason for the sudden change.

For the wrongdoing, the FSC decided to impose a fine of 8 billion won on Samsung BioLogics and recommended the firm to dismiss its chief executive Kim Tae-han.

With the ruling, the company will come under review of the bourse operator Korea Exchange for potential delisting from the country’s benchmark KOSPI where it floated its shares in November 2016. It is the sixth-highest valued firm on the KOSPI with market capitalization with 22 trillion won.

The Incheon-based firm said it would file an administrative lawsuit to prove the legality of its actions.

“We are still confident that Samsung BioLogics has not breached any accounting rules,” it said in an official statement.

The ruling from the FSC comes after a longstanding investigation into the Samsung unit’s accounting practice, which began with calls for a civic group and lawmakers in March last year.

In July, the regulator ruled on only one of the accounting issues involving Samsung BioLogics, saying the company had broken related rules as it had not disclosed information regarding its call option agreement with Biogen for three years although it had signed the deal in 2012.

Critics have argued that the company inflated its earnings to facilitate its listing and the controversial 2015 merger between two Samsung affilates -- Cheil Industries and Samsung C&T but the FSC didn‘t make comment on the company‘s links with the suspicions. 

By Park Han-na (hnpark@heraldcorp.com)

  • 페이스북
  • sms
최상단으로
COPYRIGHT HERALD CORPORATION. ALL RIGHTS RESERVED.